FinishedCountryProject[1]

Table of ContentsCultural Analysis

Executive Summary --------------------------------------- 2Intro --------------------------------------- 4Brazil History --------------------------------------- 4Geography --------------------------------------- 5Social Institutions --------------------------------------- 6Religion and aesthetics-------------------------------------- 16Living Conditions --------------------------------------- 19Language --------------------------------------- 26Appendixes --------------------------------------- 27

Economic AnalysisExecutive Summary --------------------------------------- 28Population --------------------------------------- 30Economic Statistics --------------------------------------- 34Developments in Science and Technology --------------- 46Media --------------------------------------- 50Appendixes --------------------------------------- 53

Market Audit and Competitive Market AnalysisExecutive Summary --------------------------------------- 54The Product --------------------------------------- 55The Market --------------------------------------- 57

Preliminary Marketing PlanExecutive Summary --------------------------------------- 63The Marketing Plan --------------------------------------- 64Financial Statements --------------------------------------- 81Resource Requirements ------------------------------------- 83

Appendixes ---------------------------------------------- 85Bibliography ---------------------------------------------- 86

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Country NotebookThe Country Notebook—A Guide for Developing a Marketing Plan

The Country Notebook Outline

• I. Cultural Analysis

• II. Economic Analysis

• III. Market Audit and Competitive Market Analysis

• IV. Preliminary Marketing Plan

I. Cultural Analysis

Executive summary

From our initial cultural analysis of Brazil, we have learned much about the country and gained

some important knowledge on how to do business there. Brazil is the world’s fifth largest country in

both population and in size. Geographically, it takes up a majority of the east coast of South America,

and it has a few major port cities. The most populated areas are located on or near the coast, and that’s

where we expect to do most of our business.

The next part of our cultural analysis focuses on social institutions, and in Brazil the family is

the most important of those social institutions. Families in Brazil tend to be large and close-knit,

providing members security and connections. The average family in Brazil has five to seven children,

which to us looks like an advantage because kids are the target market for our stuffed animals.

Education is also covered in the analysis, and we learned that 88% of the population has

received some form of primary education. The numbers drop off when looking at those who have

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completed secondary education. This is a factor when doing business in the country because we will

need educated and capable employees to represent our products within Brazil.

Brazil is a Federal republic, in which the powers of the central government are restricted and

the 27 states retain a degree of self-government; ultimate sovereign power rests with the voters who

chose their governmental representatives. There have been eight major political parties that have

competed for power, ranging from democratic, to labor, to socialist. The current president is a woman

named Dilma Rousseff who is a member of the workers party. Despite their efforts to reduce

corruption, it still exists in the political structure, creating some amount of risk in doing business there.

The law system in Brazil is pretty similar to that of the United States. However, Brazil has

certain marketing laws that prohibit foreign-produced advertising materials, so we would have to make

all advertisements within the country instead of doing them at our North American headquarters.

Social organizations in Brazil include labor unions and race. Labor unions are an important to

Brazilian workers because there are so many of them in many different industries. Brazilian workers

value their labor rights, and the unions help protect those rights. As for race, Brazil has a very diverse

population. Over half the population is white, 38% are mixed race, 6% are Black, and there are also

Asian and native Brazilians, which each account for less than 1% of the population. The different

races have their different cultural identities, so it would be important to learn those to find out who our

market is.

The most important aspect of the cultural analysis of Brazil is sports. Soccer is the national sport of

Brazil, and the Brazil national team is one of the best in the world. Brazil will be hosting the World

Cup in 2014, which gave us the idea to make special edition stuffed animals for the teams of the

participating countries. Two years after the World Cup, the city of Rio de Janeiro will host the

Olympics. Our special edition product will see a second release in 2016 with more available countries

for the Olympic games.

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Guideline

I. Introduction

This section will take a look into the geographical, social, and political characteristics of

Brazil. We will teach you about the way of the typical Brazilian lifestyle, including education, living

conditions and arrangements, and the Brazilian government.

II. Brief discussion of the country’s relevant history

Portuguese navigator Pedro Alvares Cabral first arrived on the Brazilian coast in April 1500

and named it Island of the True Cross, thinking he was on an island. A year later, Italian explorer

Amerigo Vespucci was commissioned by Portugal to sail to present day Brazil to bring back a special

type of wood used for making cabinets and violin bows. This Brazil wood was the first product to be

exploited by the Portuguese in this new territory, and it is the origin of the country’s name.

In 1530 the Portuguese started to colonize the new land, but their colonization was difficult due

to unfamiliar environment, indigenous peoples, and having to deal with the French and Dutch trying to

take control of the land. The colonial era lasted from 1530 to 1822, and during that time many slaves

were brought over from Africa. Portuguese colonial men were outnumbered by slaves and indigenous

people, so they took them as wives, creating the blend of ethnicities that you see in the country today.

Brazil declared its independence from Portugal in 1822. In the late 1800’s and early 1900’s the

country had a massive immigration movement, estimated to be about 2.5 million people, mostly

Europeans. Slavery was abolished in 1888.

From 1889 to 1930, the government was constitutional republic, with presidency alternating

between the two dominant states of Sao Paulo and Minas Gerais. This period ended with a coup that

place Getulio Vargas, a civilian, as president. From 1945-1961, Brazil had 6 presidents. The early

1960’s were marked by high inflation, economic stagnation, and increasing influences of radical

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political elements. This led to another coup, led by military leaders. The country has used democratic

elections since 1985. The president who led the country from 2002-2006 emphasized strict fiscal

policies. The current president is Dilma Vana Rousseff of the workers party. She took office on

January 1st of this year.

III. Geographical setting

Brazil is the largest country in South America, with an area of 3,290,000 square miles. The

largest cities are Sao Paulo and Rio de Janeiro, both located in the southern coastal region of the

country. The southeastern coastal regions are home to the large cities, while the central and northern

areas are either rural or uninhabited.

A. Location

Brazil is on the east coast of South America, at the widest part of the continent. It shares a

border with every South American country except for Ecuador and Chile.

B. Climate

Brazil’s climate is mostly tropical or semi tropical, with a temperate zone in the south.

C. Topography

Brazil has a vast mix of topography. There are dense forests in the northern regions near the

Amazon basin, semi-arid along the northeast coast, rolling plains in the southwest, Midwestern

savannahs with few trees, the world’s largest wetland area, and the coastal lowlands.

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IV. Social institutions

A. Family

Brazil is a collectivist society which places family at the center of its social structure.

Families in Brazil tend to be large and close-knit, providing members security and connections.

The importance of family is also evident in Brazilian business culture where often family members

will often be found working for the same company, either family owned or otherwise.

1. The nuclear family

In Brazil the nuclear family consists of two parents and on average 5-7 children. Same families

may have up to fifteen children. Most adult children stay in their parent’s home until they are married

and some after marriage.

2. The extended family

Family in general is a very important aspect in Brazil. Reliance upon family in encouraged, in

fact most extended families live within relative proximity of one another. An extended family in Brazil

consists of maternal and parental relatives along with in-laws. It is also a common practice for

godparents to be selected for children especially in middle and upper class families.

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3. Dynamics of the family

a. Parental roles

In the past it was common for the man to be the head of the household and for women to be

legally subordinate to their husbands, holding the domestic role. In the more recent 21st century

women are seen less in the household and more in the workplace, although they are still responsible

for the functioning of the household. Equal rights for women were only granted in 1988.

b. Marriage and courtship

Two types of marriages exist in Brazil which is civil and religious. It is common in poor areas

for couples to live without legalizing their unions. Divorce is also allowed in this country, it was only

legalized in 1977.

1. Female/male roles

Male roles in the Brazilian society are static, while the female role is ever changing. Many

males in Brazil live by the concept of “machismo” where men are seen as strong and holding authority

while women are seen as weak. Roles of the female gender vary based on race and class. Most white

middle and upper class women have more occupational choices where every other woman that does

not fall in that category is subjected to low-paying jobs in textile, electronics, or domestic labor.

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B. Education

1. The role of education in society

The role of education in society in n Brazil a minimum of eight years of schooling is required

of children. However, the years of schooling is skewed based on race and class. Generally upper and

middle class pupils attend school at least 3.5 years longer than their poor counter parts. Primary,

secondary, and higher education statistics are listed in the chart below.

Type of institution Number of institutions Number of teachers Number of pupils

Pre-primary school 107,375 310,241 5,588,153

Elementary 159,016 1,665,341 33,282,663

Secondary 24,131 519,935 8,906,820

Higher Education 1,637 227,844 3,479,913

*Higher education numbers are from 2003.

The amount of people going to school significantly drops from elementary to secondary

school. At every type of institution the students outnumber the teachers in a by a large percentage. The

number of schools available for students to study in also drops significantly from elementary, to

secondary, and then to higher education.

2. Literacy rates

The adult literacy rate in Brazil, as of 2004 was 88.6%. Females are more educated than the

men in this country. 88.8% of females are educated and 88.4% of the males are educated.

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C. Political system

The political system in Brazil is a Federal republic - a state in which the powers of the central

government are restricted and in which the component parts (states, colonies, or provinces) retain a

degree of self-government; ultimate sovereign power rests with the voters who chose their

governmental representatives

1. Political structure

The Constitution of Brazil provides for three independent governing bodies: legislative branch,

judicial branch and executive branch. On the federal level the governing body consists of a president,

vice president, a chamber of deputies and senate, represented by many different bodies. On the state

level, unicameral legislatures exist.

2. Political parties

There have been eight political parties in Brazil’s history, they include: ARENA=National

Renewal Alliance; PMDB=Brazilian Democratic Movement Party; PRN=Party for national

reconstruction; PSD=Social Democratic Party; PSDB=Brazilian Social Democracy Party; PT=

Workers’ Party; PTB= Brazilian Labor Party; n/p= non-partisan. The ruling party is currently the

workers party. The Workers Party endorses “a pure form of socialism” the rejects orthodox Marxism.

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3. Stability of government

The constitution has undergone several revisions the longest standing constitution was written

in 1988. With the recent election in 2011, the government has become quite fluid. Many party

members are switching to other parties. Relations are generally difficult between the executive and the

legislature, as well as between federal and state governments. The government in Brazil is torn

between promoting business in the country and dealing with the social issues. Although it is on the

right path to represent its people and end suffrage, it still has a great deal of corruption.

4. Special taxes

Brazil has a special tax that is to solely support the building and renovation of sports stadiums

there. The stadiums are for the upcoming World Cup.

5. Role of local government

Brazil has a highly centralized system were the local government s have little room to control

their own communities. The states are divided into 5,507 municipalities, which are, in turn, divided

into districts. Each municipality has its own elected council and mayor. The state and municipal

legislative bodies are subordinate to the federal government. Municipal authorities are responsible for

the construction and maintenance of roads, the creation and upkeep of public parks and museums, and

for the program of primary education.

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D. Legal system

1. Organization of the judiciary system

There is a supreme federal court of judges in Brazil. It consists of 11 judges appointed by the

president. There are also four other courts which are regional federal courts, labor courts, electoral

courts, and military courts. Each state in Brazil has its own courts and judicial systems that are in

accordance with the federal constitution.

2. Code, common, socialist, or Islamic-law country?

Code law is practiced in Brazil through civil law systems. Civil law systems have drawn their

inspiration largely from the Roman law heritage and which, by giving precedence to written law, have

resolutely opted for a systematic codification of their general law. It is the most widespread system of

law in the world.

3. Participation in patents, trademarks, and other conventions

Brazil is a member of the World Intellectual Property Organization (WIPO) and is a signatory

to the Paris and Berne Conventions, the Patent Cooperation Treaty, and the Universal Copyright

Convention. Most of Brazil’s IPR statutes are consistent with western standards. In the past there has

been a lack of coverage for trade secrets, pharmaceutical patent protection, industrial designs, well-

known trademark protection and advertising slogans, but as of May 1997 the Industrial Law covers

these things. However the protection of circuit layout of designs is not protected.

Patents require that absolute novelty, industrial nature and incentive nature be granted. Product

patents are valid for 20 years and the date of protection starts at the request for the patent. Processing

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an application for a patent can take anywhere from five to eight years. The application must include a

full description of the invention and its drawing, and proof of compliance with the law. The

application is kept secret for 18 months before it is officially published.

Trademarks must be registered as foreign or Brazilian to receive protection. They must be

registered with the National Institute of Industrial Property. The first to register the trade mark is

entitled to it. Marks are registered for ten year periods; if it isn’t used with in the first five years then a

registration lapse will occur. Before 1992 fraudulent trademark registration was common. Trademarks

are usually processed within one year’s time.

Copyrights receive protection even if they are not registered. Works are protected for the life of

the author plus 60 years. Copyright infringement may be punishable by imprisonment and civil

damage.

4. Marketing Laws

Restrictions are placed on foreign-produced advertising materials. Two-thirds of foreign film

footage and all sound tracks must be produced in Brazil. A special tax, the CONDECINE, is levied on

any foreign cinematographic or video phonographic advertisement. In Sao Paulo there is a law that

bans all visual pollution, including billboards, electronic signs, and filers. Advertising matter, trade

catalogs and other printed promotional materials, including posters and calendars, are dutiable. An

import license is required if the value of materials is over $1,000.

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E. Social organizations

There are several social organizations that promote every aspect of life in Brazil including

politics, race, labor, and human rights.

Workers are grouped together primarily in the Sole Group of Labor Unions

(CUT), the General Confederation of Workers (CGT) and the Labor Union Forum. Many labor unions

do not belong to any of these, preferring to remain independent. Movement of the Landless (MST), an

association of workers without land whose agenda is agrarian reform in rural areas, and land for the

construction of housing, in urban areas. National Union of Indigenous Peoples (UNI), an association

of Brazils different indigenous groups. Pastoral Commission of the Earth (CPT) and Indigenous

Missionary Council (CIMI), pastoral groups of the Catholic Church involved in social action in these

areas. Defense Network of the Human Race (REDEH), an eco-feminist organization. "Torture Never

More”, state groups committed to the defense of human rights.

1. Group behavior

A large group of Germans and Japanese have their own value systems which differ from other

Brazilians but for the most part the basis for behavior is across the board is discussed below. Decision

making in Brazil is each individual’s responsibility, but in Brazil family loyalty is the individual’s

highest duties. The church gives great structure to the lives of Brazilians. In terms of equality and

inequality Men perceive women to be subordinate and class and status are both strongly considered in

this culture.

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2. Social classes

In the last decade, collected data shows that the wealthiest 20% of the nation earn twenty-six

times as much as the poorest 20%. An estimation of 33 million Brazilians live in poverty. The

Brazilian middle class accounts for one-fifth to one-third of the population. It was also found that

around 19 million people moved for the poor class to middle class in the middle to late 1990s.

3. Clubs, other organizations

Brazilians believe that being a member of a club gives the perception of exclusivity and class.

4. Race, ethnicity, and subcultures

There is an implied sense of “racial democracy” one without prejudice towards darker skinned

citizens even though it is untrue. The Brazilian system of racial classification is more complex than

that of the U.S. How individuals are classified depend on physical features as well as social class,

education, and manner of dress. The higher the social class, the lighter the racial category to which an

individual belongs to, the lower the social class, the darker the racial category.

Four major groups make up the Brazilian population. They are the Portuguese, who colonized

in the 16th century; central and west Africans, who were brought to Brazil as slaves; indigenous people

of the Tupi and Guarani language groups; and various other European, Middle Eastern, and Asian

immigrant groups, who have settled in n Brazil since the mid-19th century. Of the total population,

over half (54%) identified themselves as white-direct descendants of Europeans. Another 40% are of

mixed heritage. The remainder includes Brazilians of African, Asian or other descent.

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F. Business customs and practices

Business people in Brazil operate on a polychromic system, which means that it is

important to understand that punctuality is not an important. Business hours are usually advertised as

8:30am to 5:30pm but the higher ups usually start the day late and leave later. Business transactions

should be avoided around Carnival, which is a week-long celebration. Appointments should be made

week in advance and spur of the moment meetings should never be attempted. Building relationships

in Brazil are very important and are easily accomplished over a good meal. Long-term resources such

as time and money should be readily available to establish strong relationships in Brazil. Most

Brazilians conduct business through personal relationship, so having a Brazilian contact is invaluable

in international business.

Negotiations usually take a series of several meetings. Discussions of all aspects of the

contract are usually occurring simultaneously rather that sequentially. Personal relationships are very

important so change a negotiating team or bringing in new members may undermine the contract. It is

normal for a conversation to be highly animated, with many interruptions and a great deal of physical

contact. U.S citizens should be aware that Brazilians consider themselves as “Americans”; therefore it

is important not to refer the U.S as “America”.

When greeting in Brazil, handshakes are common during the first meeting, upon arrival and

departure. Women often kiss each other on the cheek, twice if married and three times if single.

Brazilians communicate in extremely close proximity. When giving a gift one should avoid black or

purple which symbolizes mourning and the giving of knives which symbolize the cutting off of a

relationship. The best gift to give is a meal and name-brand pens are appropriate as well.

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V. Religion and aesthetics

Religion is one of the most sensitive elements of a culture. Many people do not understand

religions other than their own, and what is “known” about other religions is often incorrect. The focus

of this section is to examine how people relate to their religion. Besides a general overview of the role

of religion in the country, look for details about religion that differ significantly from your knowledge

of that religion and of your religion (or belief system).

A. Religion and other belief systems

In Brazil there are beliefs that the Brazilians practice traditions that come from their ancestors.

Most Brazilians clam to be Roman Catholic, they also bring offerings and gifts that are made to give to

the saints and protective spirits that grant Brazilians favors. Another belief after Catholicism, the Afro-

Brazilian religion is highly pursued and very important for their culture. Brazil is the largest Catholic

country in the world; most of the Catholic Church’s attendance has been declining in the past 5 years.

In Brazil there is freedom of religious belief and expression to show anyone who or what you believe

in. There is also a church-based welfare system and educational school system that receive financial

support from the federal government for those who are in need.

1. Orthodox doctrines and structures

Brazil is a very Catholic dominated country, even though most of the Brazilians how belong to

Catholic Church’s has decrease in the past few years to 95 percent where is was in the 1950s.

Currently the number of Catholics Brazilians is about 73 percent, and they have no problems

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identifying themselves as Catholics. Some Brazilians are brought up in the Catholic tradition by their

families, but they do not practice by faith.

2. Relationship with the people

Church’s and state are not joined in Brazil by the law, but, there is freedom to practice whichever

religious views you choose to believe in. Even though in some countries people are forced to practice

religion, Brazilian people have the choice and freedom to decide which religion is best for them.

3. Which religions are prominent?

Catholicism has been known to vary depending on the rural or urban setting. Catholicism has beliefs

and practices that can be different among different cities; it depends on the part of the country you are

practicing in. Catholicism survives because of the pilgrimage centers that are located in the back lands,

Brazilians are highly motivated to come from large distances to be involved.

4. Membership of each religion

The Brazilians who are very faithful to their religion must take vows to make a pilgrimage to honor all

the saints who have fulfilled their request. Most Brazilians perform such as acts when they are looking

for employment or looking to overcome sickness within their body.

5. Any powerful or influential cults?

Spiritism is based on the relationship between the clients within the nations culture. The

Brazilian government becomes one bureaucrat or politician that will start to improve through the

rankings and will become an influential person that networks.

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B. Aesthetics

Aesthetics are of particular interest to the marketer because of their role in interpreting the

symbolic meaning of various methods of artistic expression, color, and standards of beauty. Major

blunders have been made by companies because of a lack of understanding of the importance of

specific symbols in a society. Besides the importance of aesthetics on the marketing program, some

knowledge of local artists, music, composers, regional and national dances and other artistic

expressions is vital in establishing cultural rapport with business counterparts. Being knowledgeable of

local artists reflects a genuine interest in the country.

Brazil’s music is called the sound track of life, because some people who cannot read or write

use music as their source of news. Brazilians use their countries music to influence the people to

support their culture.

1. Visual arts (fine arts, plastics, graphics, public art, colors, etc.)

There is a different form of art that comes from San Fransisco River; this art was carved into fierce-

looking figureheads. They were called carrancas, and were half human half animal; these carvings

were placed on their boats to protect the boaters from spirits and take away any bad luck. Even though

most boaters today do not believe in superstitions, most of them still carry carrancas with them.

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2. Drama, ballet, and other performing arts

Brazil is filled with a large variety of modern and folk music. The most well known type of music is

samba. Samba is also played throughout international countries, samba is one of Brazil's rhythms and

music traditions mostly played in the northeast. During the colonial times Portuguese guitar was still

very popular, it was played on the streets for many to hear. The Afro-Brazilian culture still to this day

uses religious ceremonies, and African dances and few play the percussion while the others dance.

3. Folklore and relevant symbols

The schools in Samba are a very important source that is providing symbols in Brazil. The schools

teach dancing, which allows the students to learn about their culture. The schools also prepare for a

Carnival; the students create costumes, and make their own songs so that they can participate in the

competition at the Carnival. There are also soap operas that are televised during the evening, which

most Brazilians follow on a constant basis. Most of the soap operas are not an “ongoing” series; they

usually are played for a few months. The soap operas are a very successful in Latin American

countries as well.

VI. Living conditions

Brazil's living conditions is a land of contrast, the cities have modern skyscrapers, suburban

houses, and the impoverish slums. Brazil’s urban slums have been estimated to be close to 25 million

people. The upper and middle class people in Brazil live closely to the favelas because they have a

much higher living standard. There are diverse living conditions in the rural areas, because of the

unemployment in Brazil.

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A. Diet and nutrition

There has been a big improvement in diet and nutrition in Brazil; most Brazilians have started

on a beans and rice diet. This diet also includes a source of meat and some kind of green vegetables. In

the rural areas Brazilians usually take their food source that is made at their home is now taken with

them into work.

1. Meat and vegetable consumption rates

The traditional Brazilian diet consists of rice and beans. These are accompanied by whatever

meat that may be available. Green vegetables would also be quite common when they are available.

Many low-income families in urban areas have become very reliant on bread and pasta as a part of

their diet. In recent years advancements in poultry farming have made chicken and eggs much more

obtainable because of the greater quantity and cheaper prices.

2. Typical meals

The typical meals in Brazil are Breakfast, which would commonly be the meal

between 6 am and 8:30 am. The typical Brazilian breakfast would include juice, coffee, bread, cereal,

eggs, and fruit. The second meal of the day is lunch. Lunch is considered the largest meal of the day

and is served between the hours of 11 AM and 2 PM. The final meal of the day is dinner or “Jantar”

which is generally served after 7 PM, but in larger cities it is common that people would not eat

dinner until 10 PM or later.

3. Malnutrition rates

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Malnutrition has been an issue in Brazil for many years, although they have had success in

trying to minimize malnutrition rates. During the years of 1975 to 1988 malnutrition due to lack of

protein rich foods for children under the age of 5 decreased by over 61%. Even with this dramatic

decrease in 1989 15.4 % of the entire population was believed to have chronic malnutrition. With that

being the national percentage, it did vary region to region, where the Northeast suffered from nearly

28% of people having chronic malnutrition, where the South reported only 8% of people having severe

malnutrition. Common medical conditions that have arisen due to very poor diets have included

respiratory diseases, measles, tuberculosis, and malaria.

4. Foods available

The Brazilian breakfast is very simple it includes: coffee, milk, bread and jam, ham and cheese,

also fresh fruit. Most of the items Brazilians normally eat for breakfast are very easy to have ready any

given day. The lunch and dinner menu consists of: Rice, black beans and potato’s, with a source of

meat. Brazilians really enjoy the taste for “sweet” food, with sugar added to almost everything.

B. Housing

1. Types of housing available

There are all sorts of living arrangements in Brazil. Housing in major cities in Brazil ranges

from modern skyscraper penthouse apartments to traditional suburban homes, to shacks that

sometimes lack plumbing and electricity. The urban slum areas, better known as Favelas, engulf the

hillsides surrounding the major cities. The Brazilian favelas are estimated to be home to over 25

million people. In recent years these slum dwellers have upgraded to now having running water and

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sometimes electricity, but the lack of proper sanitation is what causes great health risks. The main

reason for this is no garbage collection, nor sewer access.

Brazil’s major cities are very modern. Middle and upper class folk live in either high rise

apartment building or in homes that have all the amenities. Upper and middle class housing is nearly

the same as what you would expect to see here in the United States.

When it comes to the rural areas of Brazil, housing and living conditions vary greatly from

urban areas. People in rural areas are limited to what materials they can find locally in order to build

their living quarters, and these quarters generally depend largely on the areas climate. Common

materials used to build urban homes would include adobe, stone and wood. Native that live in the

rainforest will tend to build homes out of reeds and palms.

2. Do most people own or rent?

Upper and middle class people in urban areas are nearly at a split whether they own or rent

their homes. People that live in houses tend to own their own home, where as far as people that live in

apartments, it is more common to rent. As far as the rest of the people it is not common for them to be

renters.

3. Do most people live in one-family dwellings or with other families?

In the upper and middle class families tend to live in single family units. Lower class families

will sometime live in multiple family dwellings, but the vast majority of housing are single-family

units.

C. Clothing

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Clothing worn in Brazil is typically made of natural fibers because it’s cooler and more

comfortable.

1. National dress

Clothing is traditionally reflected by the culture in each region of Brazil. Brazilian clothes are

often comfortable clothes uniquely crafted with bright colors and attractive lacing. True traditional

Brazilian clothing for men would consist of jeans and a shirt, common women’s attire would be a

dress made of cheap cotton. Amazon Natives wear traditional tunics accompanied with tribal face

painting, using beads and feathers to decorate their bodies. In the south plains of Brazil the cowboys

generally wear baggy trousers, ponchos, wide straw hats, and boots. The cowboys in the Northeastern

region will generally wear a coat, with a cowboy hat, and leather chaps. In the Bahia area there is a

more traditional African dress, which includes a bright colorful Shaw, long skirt, and turban like head

scarf. Brazilians in the Rio de Janeiro region or other regions that are near Brazil’s beautiful beaches

tend to where more tropical clothing, such as Hawaiian shirts, sandals, and Bermudas.

In the Urban areas of Brazil, you wouldn’t really notice any difference than how we dress here

in the states. Brazilians have adapted and now wear very modern clothing. Urban men would wear

jeans, a t-shirt and some sneakers and fit in quite well, whereas the women tend to prefer short skirts

and dresses. Female Brazilian jeans are generally tight fitting from the waist line to the knee, where it

loosens up and tapers off near the feet.

2. Types of clothing worn at work

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Conservative attire for women is very important in business. Any misstep in clothing gives a

negative perception of women. Men generally wear slacks and a long sleeved shirt.

D. Recreation, sports, and other leisure activities

1. Types available and in demand

Football or better known as soccer is the most popular sport in Brazil. Soccer games draw huge

crowds, especially at Maracana Stadium in Rio de Janeiro which typically fills to it capacity of

155,000 spectators. Brazilian soccer teams are often thought of to be of the favorites at the World Cup.

Brazil is the birthplace of some of the greatest soccer players to ever live. These players include

Ronaldo Luis Nazario de Lima, Rivaldo Vito Borba Ferreira, and possible the greatest soccer player to

have ever lived, Edison Arantes does Nasciment, or better known as Pele. Woman soccer is also

gaining a lot of attention in recent years.

Volleyball is the second most popular sport among Brazilians. City governments often provide

volleyball courts and equipment for the Brazil’s beaches. Brazil’s beaches are a common gathering

place for younger more athletic youths and young adults. Beach football and volleyball are very

popular. Brazilian championships of beach football and volleyball draw thousands of spectators to the

beach as well of many viewers of television.

Beginning in the 1960’s people began to show interest in tennis. This is greatly due to the

performance of Maria Bueno when she won the U.S. tennis championships, as well as Wimbledon.

Gustavo Kuertan winning the 1997 and 2000 French Opens also brought a renewed excitement about

the game of tennis.

Just recently in the past 20 years racing has became very big in Brazil. Brazilian drivers have

won Formula One Championships as well as many U.S. Grand Prix races.

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Since Brazil has competed in every Olympic Games since 1920 with the exception of the 1928 games,

the International Olympic committee selected Rio de Janeiro for the hosting country of the 2016

summer games.

2. Percentage of income spent on such activities

According to the Euromonitor international: Latin America Marketing

and Data Statistics, as of 2008 consumer expenditure on leisure and recreation is 304 of the national

currency per capita.

E. Social security

Brazil has a comprehensive social security system which funds medical care, dental care, and

pensions for all employees, including the self-employed. All employed Brazilians are required to make

contributions of between 8-11% of their monthly salaries to the national social security system. All

money paid to the national social security system is tax deductible. This is not limited to Brazilians but

anyone who works in Brazil are required to contribute, but they are also eligible for the same benefits

as Brazilian citizens. Brazil has social security agreements with Argentina, Cape Verde, Chile, Greece,

Italy, Luxembourg, Portugal, Spain, and Uruguay. According to the agreements within these countries,

social security contributions made in one country will be taken into consideration when determining

benefit rights in another country.

F. Health care

25

The Brazilian Health Care system is guaranteed by the Brazilian Constitution called the

Sistema Unico de Saude or the “SUS.” The SUS was created in 1988 and its purpose is to give all

citizens access to health care, allow all citizens full and complete health care, and reinforce that all

health care policies should aim toward the reduction of inequality between individuals. In the 1980’s

over 75 percent of all public spending was on health and the well being of its citizens. According to

the SUS, established in 1988, the health care system is funded through the taxing and collection of

contributions of employee payroll and company profits. The percentage of total central government

spending on health in 1990 was 6.7 percent of Brazil’s overall Gross Domestic Product. In 2000, the

country had approximately 237,000 physicians, 145,000 dentists, 77,000 nurses, and 26,000 dietitians.

VII. Language Portuguese is the official language. However many other languages are spoken by the

population, including German, Spanish, Italian, French, English, and various Amerindian languages.

According to www.ethnologue.com, a total of 234 languages have been catalogued in Brazil with only

192 living and 42 extinct.

A. Official language(s)

The official language of Brazil is Portuguese, although being located so close to Spanish speaking

countries, Brazil has modified the Brazilian version of Portuguese. The Brazilian version of

Portuguese has resulted in the creation of new words, and the creation of new pronunciations.

B. Spoken versus written language(s)

26

The written language of Brazil is uniform across the country. The written language follows

national rules of spelling and pronunciation, which is occasionally updated for simplicity. Written

Brazilian Portuguese differs drastically from the spoken language and is only used correctly by a small

portion of the population. Grammar rules are complex but allow much more flexibility than English

and Spanish. Many foreigners that speak fluent Portuguese have a very hard time writing the language.

C. Dialects

Within Brazil, there are no dialects of Portuguese, but only moderate regional variation in

accent, vocabulary, and use of personal nouns, pronouns, and verb conjugations. These regional

variations are declining due to mass media, such as national television, which is viewed by the

majority of Brazilian citizens.

IX. Sources of information

Refer to Bibliography

X. Appendixes

Type of institution Number of institutions Number of teachers Number of pupils

Pre-primary school 107,375 310,241 5,588,153

Elementary 159,016 1,665,341 33,282,663

Secondary 24,131 519,935 8,906,820

Higher Education 1,637 227,844 3,479,913

*Higher education numbers are from 2003.

II. Economic Analysis

27

Executive Summary

When we do an economic analysis of Brazil, we get a closer look at whether or not our product

will be successful in a new country. We start with population, because the population is the backbone

of an economy. Brazil’s total population is 195,420,000 people, making it the 5th largest national

population in the world. Women outnumber men in Brazil. The population decreased during the

recession from 2006 to 2010, but it is slowly back on the rise in the past year.

The labor force in Brazil is made up of 103,600,000 workers, and the unemployment rate is

5.7%. This is significantly low compared to the United States seeing that both countries had

recessions. Per capita income is $10,814 USD. We see lots of opportunity for finding workers to man

our warehouses and sell our products as well as qualified corporate employees.

It is important to note the income classes in Brazil that we learned from our research. There are

three distinct classes: the very wealthy, the middle class, and the very poor. The very wealthy make up

the smallest portion of the population but earn the most income. The middle class is the biggest

portion, and has tremendous variation of income within the class. The very poor are a large group. The

“social question” for Brazilian citizens is what they should do about the growing discrepancy between

the income of the upper class and that of the poor.

Brazil has all the resources that a company needs to do business. They have modernized roads,

trucks, airports, railroads, and major seaports to handle logistics operations. Brazil also makes use of

modernized communications systems such as telephone, Internet, and fax machine on a regular basis.

Broadband Internet is available in over 80% of Brazilian cities.

Working conditions in Brazil are highly dictated by labor unions. The workers’ party is the

political party in power, voted in by the people who work in the unions to protect their own causes.

There are many unions, and there are large groups made up of multiple unions based on industry.

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Brazil’s principal industries include agriculture, electronics, automobiles, and heavy

machinery. They are also big in oil and gas, mining, banking, raw materials, and steel. Brazil is a

member of several trade organizations, including Mercosur, Unasol, WTO, and G-20. Currently

Brazil has a trade surplus of $12 billion USD, with $199.7 billion in exports and $187.7 Billion in

imports. The exchange rate between Brazil and the US makes one Brazilian Real worth just under

$0.63 US.

Brazil has specific laws regarding importation of goods into the country that we will go over in

more detail later on. They have a value-added tax applied to consumer goods and merchandise as well

as a Merchant Marine tax on all shipments that come into the country by sea. There are also strict

licensing laws, which require a lot of documentation.

Brazil has access to all the different types of media. There are an estimated 71,000,000 radios

in Brazil and currently 138 television broadcast stations. As far as reaching as many people as

possible, radio is most effective reaching up to 98% of the population, then TV with 92.7%, followed

by print and then Internet. These will be important as we factor in our advertising plans into the

marketing plan.

I. Introduction

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Before World War II Brazil was the leading producer in many agricultural goods including

sugar, rubber, and coffee (main exports). However, price variations in the world market made the

country vulnerable. After the War the government opted to make industrialize the country so that it

would not be solely dependent on imports. In fact it became one of the only industrialized countries in

South America. The countries major economic sectors today are industry, agriculture and services.

Agriculture accounted for 5.1% of GDP in 2006. The country is the world’s largest producer of

sugar cane, coffee and tropical fruits. Other important agricultural products include soybeans, corn,

cotton, cocoa, tobacco, and forest products. Industry accounted for 30.9% of GDP in 2006. Sectors in

industry include automobiles, machinery and equipment, steel, textiles, cement, petrochemicals and

consumer durables. Services accounted for 64% in 2006. Brazil's services sector includes

telecommunications, banking, commerce and computing. Brazil also has the largest rainforest in the

world -- located in the Amazon Basin-- and is one of the world’s leading producers of hydroelectric

power.

II. Population

Brazil is the most populated country in South America and the fifth-largest populated in the

world. Majority of the population in Brazil reside in the urban areas of the country. Population in 2010

was estimated to be 195.42 million people, with women out numbering men.

A. Total

30

The total population in Brazil is estimated to be at around 195.4 million people

in 2010.

1. Growth rates

2005 2006 2007 2008 20091.207% 1.117% 1.041% 0.9730% 1.123%

*Country watch

2. Number of live births

The total number of registered live births in 2006 was 2,799,128. That is a rate

of about 15 babies per 1,000 people.

Statesman yearbook 2011

3. Birthrates

Birthrates have dropped significantly from 1980 to 2008. In 1980 the birthrate

was 32 per 1,000 inhabitants and as of 2008 it is 19.2 per 1,000 inhabitants.

Latin America marketing handbook

B. Distribution of population

31

1. Age

Population by age

Age Percentage

Ages 0-14 26.2%

Ages 15-64 67.0%

Ages 65+ 6.7%

*CIA fact book: https://www.cia.gov/library/publications/the-world-factbook/geos/br.html

2. Sex

Population by sex-‘000

Sex Total Life expectancy

Male 95,745.8 68.5 years

Female 98,482.0 78.1 years

3. Geographic areas (urban, suburban, and rural density and concentration)

Demographic density is measured by the ratio between the population and the territorial area,

normally expressed as a number of inhabitants per square kilometer.

In Brazil, according to the 2007 version of the National Survey of Sampling of Households

(Pesquisa Nacional de Amostragem de Domicílios – PNAD) of the Brazilian Institute of Geography

and Statistics (Instituto Brasileiro de Geografia e Estatística – IBGE), the average demographic

density stands at 22.3 people per square kilometer. However, the north region, which has 45.2% of the

total land area of the country and 8.1% of the population, has a demographic density of only 4 people

per square kilometer, while the southeast, with more than 42% of the country’s population, is the

region with the highest demographic density, with 87.4 people per square kilometer.

4. Migration rates and patterns

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As of 2011 the migration rate is -0.09 migrant(s)/1,000 population. (CIA:Factbook)

5. Ethnic groups

“Four major groups make up the Brazilian population. They are the Portuguese, who colonized

in the 16th century; central and west Africans, who were brought to Brazil as slaves; indigenous people

of the Tupi and Guarani language groups; and various other European, Middle Eastern, and Asian

immigrant groups, who have settled in n Brazil since the mid-19th century. From 1875 until 1960,

about five million people immigrated to Brazil, settling mainly in the four southern states of Sao

Paulo, Parana, Santa Catarina, and Rio Grande do Sul. Immigrants came mainly from Italy, Germany,

Spain, Poland, the Middle East, and Japan. (The largest Japanese community outside Japan is in Sao

Paulo.) Intermarriage between the Portuguese and indigenous people or African slaves as well as

Brazil's many waves of immigration have contributed to a diverse ethnic and cultural heritage. Despite

class distinctions, national identity is strong.”

“Indigenous full-blooded Indians, located mainly in the northern and western border regions and in the

upper Amazon Basin, currently constitute less than one percent of the population. Their numbers are

declining as contact with the outside world and commercial expansion into the interior increase.

Brazilian government programs to establish reservations and to provide other forms of assistance have

existed for years but are controversial and often ineffective.”

III. Economic statistics and activity

33

Since 2003, Brazil has steadily improved its economic stability. It has built up foreign reserves,

and reduced its debt profile by shifting its debt burden toward domestic instruments. In 2008, Brazil

became an external creditor and two ratings agencies awarded investment grade status to its debt.

After growth in Brazil’ economy, a financial crisis hit. Brazil experienced two quarters of recession,

as global demand for Brazil's commodity-based exports dwindled and external credit dried up.

However, Brazil was one of the first emerging markets to begin a recovery. Consumer and investor

confidence revived and GDP growth returned to positive in 2010, boosted by an export recovery.

Brazil's strong growth and high interest rates make it an attractive destination for foreign investors.

Over the past year inflows of large capital have fueled the economy

A. Gross national product (GNP or GDP)

Brazil’s GDP in 2009 was $1.577 trillion by the official exchange rate, and $2.025

trillion when purchasing power parity is factored in. This is the 8th highest GDP in the world.

1. Total

Brazil’s 2010 Gross Domestic Product was $2.023 trillion according to the International Monetary

Fund.

2. Rate of growth (real GNP or GDP)

Brazil’s annual real growth estimated for 2010 is 7.5% according to the CIA World Factbook.

B. Personal income per capita

34

Brazil’s Central Bank reports per capita income to be $10,814 for 2010

C. Average family income

Based on the average family having 2 parents and 5-7 children, the average family income is

about $86,512 US or 136,602.44 Brazilian Real.

D. Distribution of wealth

Brazil shows a clear separation between poor and wealthy economic classes. Even the

major city of Rio de Janeiro has a wealthy, industrialized southern section and a poor, undeveloped

northern section.

1. Income classes

Class lines in Brazil are divided into the very wealthy, the middle class, and the very poor, with

the very poor making up a large percentage of the population. The very poor can be seen selling food

and trinkets in the street at a stoplight. In Brazil it is extremely difficult for anyone to advance social

levels, regardless of race. (Zona Latina)

2. Proportion of the population in each class

The very wealthy class of people makes up 5% of the population. The middle class accounts

for up to 33% of the population, but the resources and lifestyles of its members vary considerably.

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Much of the population of the middle class left Brazil for North America, Europe, and Japan when

inflation was very high in the late 1980’s (Ember, 293)

3. Is the distribution distorted?

Despite making up 5% of the population, Brazil’s very wealthy class earns 80% of the country’s

income. 26% of the population was below the poverty line in 2008

E. Minerals and resources

Brazil’s national resources include iron ore, manganese, bauxite, nickel, uranium,

gemstones, oil, wood, and aluminum. Brazil has 14% of the world’s renewable fresh water.

F. Surface transportation

Much of the area within the country is undeveloped, but the more populated and

developed regions have adequate driving roads, railroads, and airports.

1. Modes

Possible modes of transportation our product will use are trucks, cargo aircraft, railroads, and

possibly boats. However we are not sure about using commercial watercraft because the International

Maritime Bureau reports the territorial and offshore waters in the Atlantic Ocean as a significant risk

for piracy and armed robbery against ships; numerous commercial vessels have been attacked and

hijacked both at anchor and while underway; crews have been robbed and stores or cargoes stolen.

36

2. Availability

The modes of transportation we have mentioned appear to be readily available.

3. Usage rates

Brazil has 4,263 airports which see 654,100 departures per year. There are 94,871 km of paved

highways, and 81 motor vehicles for every 100 people.

4. Ports

Major ports include Belem, Fortaleza, Ilheus, Imbituba, Manaus, Paranagua, Porto Alegre,

Recife, Rio de Janeiro, Rio Grande, Salvador, Santos, and Vitoria. (Nationmaster) Santos, the largest

port in all of South America, is privatized and open 24 hours.

G. Communication systems

Brazil has modernized communication systems.

1. Types

Land lines, cellular phones, facsimile and internet are common in the urban areas, but in rural

areas they may not be available.

2. Availability

As of 2010, broadband is available in 88% of Brazilian cities

3. Usage rates

37

Brazil is ranked 7th among nations in internet usage worldwide, with 34% of its population

using the internet. (InternetWorldStats.com) The country currently has 33,800,370 active telephone

land lines. There are 84.61 cell phones per 100 people.

H. Working conditions

Unions represent all major segments of industry. Unions are legal, and financed by compulsory

payments deducted from workers' paychecks and by membership dues. Approximately 7 million

workers are unionized, accounting for 20-30 percent of the employed labor force.

1. Employer-employee relations

An employee is defined in the Labor Code as an individual who renders services to an employer

on a permanent basis, under its direction and for a salary. (Tozzini)

2. Employee participation

Employees in Brazil usually work a maximum of 40 to 44 hours per week. Brazilians usually

work on an “employee's record book” (Carteira de Trabalho e Previdência Social - CTPS) instead of a

work contract. A detailed work contract is only common for managers and executives. The Brazilian

Labour Law prescribes an annual vacation of 30 days, which should be taken all at once or divided in

two parts (one half must be of at least 20 days). Brazilian workers are eligible for full-time

employment already at the age of 14 but there are certain protective regulations covering adolescents

aged 14 to 18. (JustLanded)

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3. Salaries and benefits

According to Brazil’s constitution, workers must receive equal pay regardless of sex. Maternity

benefits include a 90-day leave for mothers and a one-week leave for fathers. The minimum wage set

for 2011 is R$7,080.00 or R$545 per month plus an additional 13th salary in second half of December.

I. Principal industries

Brazil has a strong agricultural sector as the world’s largest producer of orange juice and

coffee. The country’s big manufacturers include producers of automobiles, electronics, and heavy

machinery.

1. What proportion of the GNP does each industry contribute?

Agriculture accounts for 5.6% of GDP. Manufacturing accounts for 27.8% of GDP. Services account for 66.6% of GDP.

2. Ratio of private to publicly owned industries

The banking industry has a commercial bank which is state owned. There are 13 oil refineries

of which 11 are state owned. The railways in Brazil are privatized and the telecommunications are

state owned.

39

J. Foreign investment

Brazil, together with Mexico, has been at the forefront of the Latin American multinationals

phenomenon by which, thanks to superior technology and organization, local companies have

successfully turned global. These multinationals have made this transition notably by investing

massively abroad, in the region and beyond, and thus realizing an increasing portion of their revenues

internationally.

1. Opportunities?

There are several opportunities in Brazil for foreign investment with its high population and

growing purchasing power.

2. Which industries?

The services industry would offer the most opportunities for foreign investment, specifically in

the areas of tourism and retail.

K. International trade statistics

Brazil is a major player in international trade. It has reduced its tariffs on over 13,000 items.

The government in Brazil try’s to maintain positive trade balance by having more exports than

imports. Brazil is a member of GATT and MERCOSUR.

40

1. Major exports

Brazil’s major exports include transport equipment, machinery, steel, airplanes, paper, electric

machinery, iron ore, soybeans, footwear, coffee, autos, automotive parts, and machinery.

a. Dollar value

Exports were valued at $201.9 billion US in 2010.b. Trends

Exports in Brazil continuously increase from year to year in large amounts.

2. Major imports

Brazil’s imports include machinery, electrical and transport equipment, chemical products, oil,

automotive parts, and electronics.

a. Dollar value

Brazil’s imports were valued at $187.7 billion US in 2010

b. TrendsMajor imports have continued to increase over the past three years.

3. Balance-of-payments situation

a. Surplus or deficit?

Brazil reported a trade surplus equivalent to 1.199 Billion US Dollars in February of 2011

41

b. Recent trendsBrazil’s trade balance has varied seasonally over the past 5 years, with less stability than before

2005. They had a trade deficit in January 2008, January 2009, and January 2010. However, in January

2010 the trade surplus spiked to the highest it has been in 5 years.

4. Exchange rates

There are no restrictions on the exchange between the US Dollar and the Brazilian Real.

a. Single or multiple exchange rates?

Under the “Real Plan” of 1994, Brazil uses a single-exchange-rate system.

b. Current rate of exchange

Currently, one US dollar is worth 1.589 Brazilian Real. Inversely, one Brazilian Real is worth

just under $0.63.

c. Trends

Compared to the US dollar, the Brazilian Real was on a steady decline from 2006 to 2008,

going from 2.25 in June of 2006 to 1.5 in August of 2008, when the US started to feel the effect of the

recession. The Real then spiked in value in November 2008 at 2.46 Real per US Dollar. It has been

steadily decreasing since then. (Google)

L. Trade restrictions

Brazil liberalized their trading system and policies in 1990. They were one of the first countries

involved in Mercosur along with Argentina, Paraguay, and Uruguay. Mercosur is an economic and

42

political agreement between the 4 nations to promote free trade and the fluid movement of goods,

people, and currency.

1. Embargoes

Brazilian meat imports were suspended after a 'foot and mouth' disease outbreak in cattle, but the

ban on exports to other countries has since been lifted as of August 2009. (ThePigSite.com) Countries

that placed an embargo on Brazilian meat include Canada and South Africa.

2. Quotas

Sectors which now require an import license and are limited are the wheat and flour industry,

plastics, iron and steel, copper, aluminum, capital goods, electric equipment and machinery, textiles,

auto parts, automobiles, surgical and optical instruments.

3. Import taxes

The Merchandise and Service Circulation Tax is a state government value-added tax applied to

imports as well as domestic products. Brazil has a Merchant Marine Tax, which is assessed at 25% of

ocean freight charges on import by sea. (D&B 2.195)

4. Tariffs

Import tariffs generally range from 10 to 20%, although there are higher tariffs applied on some

products. (D&B, 2.194) There are no tariffs on children’s toys.

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5. Licensing

Firms importing into Brazil must be registered with SECEX’s Importer and Exporter Registry;

only registered firms can import goods into Brazil. Registration requirements can time-consuming and

include minimum capital requirements. Once registered with SECEX, companies must apply for an

import license before proceeding with a planned shipment. Approximately 40 percent of all imports

require licenses. (D&B, 2.193)

6. Customs duties

Custom duties are said to change frequently, which is why a set percentage could not be found.

After a certain amount of items are brought then duties apply.

M. Extent of economic activity not included in cash income activities

1. Countertrades

Private-sector countertrade deals are increasingly rare. Products obtained from Brazil in

countertrade deals include petrochemicals, oil-drilling equipment, armored cars, foodstuffs, orange

juice, sugar, chicken, beef, unrefined soybean oil, cocoa butter, coffee, cocoa, and leaf tobacco.

(Store.EIU.com) We do not plan on using any countertrades as we are not involved in any of those

industries. We should be able to afford our warehouses without the need for financing through

countertrade.

44

a. Products generally offered for countertrading

This portion of the project could not be found in the books on reserve nor the internet.

b. Types of countertrades requested (i.e., barter, counterpurchase, etc.)

This portion of the project could not be found in the books on reserve nor the internet.

2. Foreign aid received

In 2005, Brazil and its southern cone neighbors received $52 million in foreign aid from the US.

Brazil receives assistance from the Andean Counterdrug Initiative because it shares a 1,000 mile

border with Colombia even though Brazil is not considered an Andean country. This included $8.9

million in 2005. (Congressional Research Service)

N. Labor force

1. Size

Brazil’s labor force consists of 103,600,000 workers.

2. Unemployment rates

The current unemployment rate is 5.7%.

Research in physical and social sciences in Brazil was hit hard by the economic

crisis. Since them almost all academic research is done by public universities and is funded by state

and federal government. The private sector in scientific research contributes very little.

45

O. Inflation rate

As of August 2010, the inflation rate was 4.44%.

IV. Developments in science and technology

Research in physical and social sciences in Brazil was hit hard by the economic crisis. Since

them almost all academic research is done by public universities and is funded by state and federal

government. The private sector in scientific research contributes very little.

A. Current technology available (computers, machinery, tools, etc.)

Many household technologies available in Brazil include digital TV, gaming systems, and

computers. Some high tech facilities offer research in nanotechnology and biotechnology.

Nanotechnology is being used to create new materials, products and processes through the

manipulation of atoms and molecules. Scientific research has led to new techniques that have allowed

the transfer of genes from one species to another, providing a range of healthcare applications.

B. Percentage of GNP invested in research and development

The percent of GNP invested on research and development is 1.07. The entrepreneurial sector

spends on research and development on GNP is .04 percent. The Brazilian Government spends .67

percent on GNP.

46

C. Technological skills of the labor force and general population

Despite the high literacy rate, only a small portion of the population holds jobs in the

professional level of the work force. Majority of the of the population work in the services and

agriculture doing work that requires less skill than what they are capable of.

V. Channels of distribution (macro analysis

A. Retailers

Brazil’s retail section of business has a wide range from clothing stores, do it yourself,

manufacturers and many more. The retail sector for apparel and clothing goods is a very large and has

grown 7 percent and has an estimation of 37.2 billion for the year. Since Brazil is not a very old

country 60 percent is under the age group of 29 year old and because of the young age group the

fashion industry is very popular. Brazilian consumers spend nearly 402 billion on apparel, which is

more than most retail markets.

1. Number of retailers

The number of retailers in Brazil 1,266,198, which stated in 2009.

2. Typical size of retail outlets47

In Brazil there were only a few companies that employed more than 500

employees. Most companies do not have a very large employee basis in the retail

industry. In 1997 there was a hiring spree where more than 75 companies that hired 500

employees or more depending on the retail company.

3. Customary markup for various classes of goods

The markup rate for various goods is between 25-35% percent. Depending on

what types of goods are being looked at, whether it’s retail or wholesale.

4. Methods of operation (cash/credit)

Most of the Brazilian consumers use either cash or credit when purchasing various

goods or services.

5. Scale of operation (large/small)

The size of the retail operations are mostly small family owned businesses. In the bigger cities

there are larger retail outlets that Brazilian consumers shop and supply their households.

6. Role of chain stores, department stores, and specialty shops

Brazil’s southeast region is the most developed area where the largest do it yourself, and

supermarket chain stores are located. The biggest stores can be found in the remote regions, these

stores are limited to big urban areas. This is the quickest growing city in Latin America. The mega-

48

stores in São Paulo are mostly construction related stores. The supermarkets in Brazil have a very

large range of domestically produced household goods, which include: dairy products, meats, and

alcoholic beverages. They also sell electrical appliances, cleaning products, clothing, and garden

furniture items.

B. Wholesale middlemen

The wholesalers and middlemen are very popular in some markets, in the toy market

wholesalers or middlemen are not very popular because the product gets shipped right from the

factory.

1. Number and size

There are 370 wholesale and retail businesses, which sell various products to the retailers in

Brazil.

2. Customary markup for various classes of goods

Cannot find this information in the wholesale book, or anywhere on the Internet.

3. Method of operation (cash/credit)


C. Import/export agents

150,793 Import/export agents in Brazil.

49

D. Warehousing


E. Penetration of urban and rural markets

VI. Media

A. Availability of media

The country has access to all the different types of media. Have 71,000,000 radios and 138 television

broadcast stations.

B. Costs

The advertising sector in Brazil is quite similar to that of the United States. Brazilians advertise

on television, on the radio, in print ads, and outdoors. Television advertising is most expensive,

followed by radio advertising, then print and outdoor advertising bring up the rear.

1. Television

The television product category costs for Retail, Finance, Personal Care, and Consumer services are in

million s, (3,648.4), (1,340.7), (1,117.8) and (787.3). The costs for public/social services, beverages,

culture, vehicles, telecoms and food are $ (763), (757.4), (673.3), (672.7), (610.0) and (588.3).

50

2. Radio

There are 3,988 commercial radio stations. The number of radio households is around 98%. The main

stations are Globo AM, Rede Bandeirantes, Jovem Pan Sat, and Rede Band. The top radio advertisers

are DM Farmaceutica, Casas Bahia, Bradesco, Prezunic, and HSBC. Their expenditures in millions in

descending order are as follows: $77.5, 36.1, 15.6, 15.1, 14.3, and 11.2.

3. Print

The top newspaper advertisers are Casas Bahia, Ponto Frio, Hyundai Caoa and GM with expenditures

in millions ranging from 586.4 to 112.2. The top product categories are retail, real estate, consumer

services and culture with expenditures in millions ranging from 2,811.6 to 586.

4. Other media (cinema, outdoor, etc.)

There are 30,418 outdoor sites and 1,916 cinema screens. Outdoor advertisers consist of companies

such as TIM, Unilever, Avon, Claro, La Violetra. Their expenditures in millions in descending order

are as follows: $1,123, 857,740,604, and 471.

Cinema advertiser expenditures are from companies such as Unilever, Coca-Cola, Ford, Kaiser,

Ambev, IG, Fiat, PepsiCo, and Claro. Their expenditures in millions in descending order are as

follows: $23.8, 16.9, 16.7, 9.4, 7.8, 5.8, 4.7, 2.9, and 2.8.

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E. Percentage of population reached by each of the media

TV – 92.7%

Radio- 98%

Print – 14.6%

Internet -11%

Other – Outdoor = .0015%

Cinema= .0000096

VIII. Sources of information

Either listed following statistics, or located in the Bibliography

IX. Appendixes

52

2005 2006 2007 2008 20091.207% 1.117% 1.041% 0.9730% 1.123%

Population by age

Age Percentage

Ages 0-14 26.2%

Ages 15-64 67.0%

Ages 65+ 6.7%

*CIA factbook: https://www.cia.gov/library/publications/the-world-factbook/geos/br.html

Population by sex-‘000

Sex Total Life expectancy

Male 95,745.8 68.5 years

Female 98,482.0 78.1 years

TV – 92.7%

Radio- 98%

Print – 14.6%

Internet -11%

Other – Outdoor = .0015%

Cinema= .0000096

III. Market Audit and Competitive Market Analysis 53

Executive summary

The market audit and competitive market analysis gives us a closer look at the major

problems and opportunities that may require our attention in the marketing mix, It will help determine

which strategies to use to find the most effective way to get our product on the market so that we can

see success within the foreseeable future. Our product may seem pretty basic seeing that it’s just a

stuffed animal, but Build-A-Bear has innovated the idea of the stuffed animal by making it an

interactive experience for the children who come into the store. They get to pick an animal out of

several design and color options, they get to control the amount of stuffing that goes into their furry

friend, and they can even give it a recorded voice or a heartbeat. They also get to put accessories on

the bear such as little costumes or the jersey of their favorite sports team.

The market in Brazil for stuffed animals and toys isn’t exactly a gold mine because these are

leisure items that are mostly only affordable for the upper middle class to wealthy people in the

country. Also, the competition offers payment plans to those who can’t easily afford toys and stuffed

animals. However, we feel that we can hit a niche market when the World Cup and Olympics come to

Brazil in the next few years.

Guideline

I. Introduction

54

The product that we are going to be selling is a novelty for The World Cup 2014 and the

Olympics in 2016. The innovation is very complex; we are taking Brazil’s national animal and making

placing Brazil’s jersey on the animal to create a novelty item. The market will use the items to

remember that the World Cup and the Olympics and each consumer represented their country. We will

also offer stuffed animals for every country that participates in the Olympics or the World Cup.

II. The product

The product we intend to market in Brazil is stuffed animals. We will start with stuffed animals

representing the national animals of Brazil: the Macaw and the Jaguar. For 2014 and 2016, we will

carry stuffed animals that come available with team and country based accessories to market to the

tourist that come in for the World Cup and the Olympics.

A. Evaluate the product as an innovation as it is perceived by the intended market

1. Relative advantage

The advantage of our product is that it provides a toy for children to play with as well as a

keepsake from two of the world’s premier international sporting spectacles. Some toys are only good

for children above a certain age, but a stuffed animal can be loved and enjoyed by children of all ages.

2. Compatibility

Our product should be compatible with Brazilian culture because the World Cup is the world’s

biggest soccer event and Soccer is the favorite sport of Brazil.

3. Complexity

55

This is a simple product that can be used by anyone with no required special skills.

4. Trialability

The consumer can check out the stuffed animal right at the store’s display before they purchase

it. They can feel how soft it is, how much stuffing it has, and if there are any hard parts that could be

harmful to a child. However, if these stuffed animals are sold on the internet, the consumer will not be

able to test them before buying. There is no risk involved, as the product isn’t a major investment, but

a novelty gift.

5. Observability

The regular edition of our product will have no real benefit to the consumer besides giving them

personal satisfaction, something to cuddle with, and a sense of national pride. The special edition will

be more expensive and a collector’s item, so the consumer may need to be instructed that the product

may experience a substantially increased value based on exclusivity and high demand. We expect this

to be similar to the “Beanie Baby phenomenon in the United States in the 1990’s.”

B. Major problems and resistances to product acceptance based on the preceding evaluation

Many Brazilians tend to buy products that are associated with brand names. Our

product would be completely new to the nation or the name will. On the other hand, Brazilians love

American made products.

III. The market

56

A. Describe the market(s) in which the product is to be sold

1. Geographical region(s)

Our product will be sold in the major urban areas of the country. For the world

cup in 2014, the World Cup bears will be sold mainly in the cities that are home to World Cup

matches. For the Olympics in 2016, they will be sold mainly in Rio de Janeiro, the host city.

2. Forms of transportation and communication available in that (those)

region(s)

The cities that are hosting the World Cup matches all have airports and major roads to be able to

handle the tourism, so they should be able to handle our shipments. 8 of those cities are located near

water, so shipping by boat may also be an option.

3. Consumer buying habits

The market for personal and leisure goods in Brazil has increased between 2004 and 2009 as the standard of living increases with industrialization.

a. Product-use patternsThis product will serve multiple proposes: a novelty item, a souvenir, and children’s toy. A

special addition of the product will be available only during the World Cup and the Olympic Games to

show the consumer’s favorite team. The regular edition will serve as a children’s toy all year around

through the build-a-bear workshop.

b. Product feature preferences

57

The product will be sold as a single item with options to purchase two or more at a special

discount. The regular edition of the product will come with a dust proof bag. The special edition will

be packaged in a case with an engraved metal plate stating the event and year.

c. Shopping habits

The Brazilian toy market felt the impact of the financial crisis in 2009. Toy retailers

increasingly devote more space to baby and toddler items to increase the dependency of seasonal sales.

As the economy continues to grow we will see more low-income segments join the consumer market

for leisure goods positively changing the shopping habits of the Brazilian people.

4. Distribution of the product

The product will be sold strictly in our retail outlet stores to promote the product and the store

brand.

a. Typical retail outlets

Our product will be sold at large hypermarkets, small retail operations such as novelty gift

stores, kiosks outside World Cup stadiums, and anywhere tourists may visit while in the country for

the World Cup and the Olympics.

b. Product sales by other middlemen

This product will not be sold by middlemen; it will be sold throughout out retail outlet stores.

5. Advertising and promotion

58

Our advertising will be seasonal, with the biggest efforts coming around Christmas and

Children’s Day (October 12th) and just before the 2014 World Cup and the 2016 Olympics.

a. Advertising media usually used to reach your target market(s)

We will advertise on television during children’s programming and also through the World

Cup and Olympic Games advertisements. Since 98% of the population has radios we will also reach

our potential customers through radio advertisements. One of the major networks we will advertise

through is Globo because it is the largest network that reaches majority of the population.

b. Sales promotions customarily used (sampling, coupons, etc.)

There will be coupons sent out by mail to the consumers who have showed interest in

purchasing the product. We will partner with national chain stores where the customers will receive

special offers for our product when they purchase a certain amount of specific products. When

consumers purchase a variety of products that relate to our target market, they will receive offers

related to our products.

6. Pricing Strategy

Our Pricing strategy will consist of pursuing the middle and upper class markets.

a. Customary markups


b. Types of discounts available

Cannot find this information in the wholesale book, or anywhere on the Internet.A. Compare and contrast your product and the competition’s product(s)

59

1. Competitor’s product(s)

Most of our competitor products are distributed through the Long Jump Company based out of

Sao Paulo Brazil. Long Jump sells an array of products including a large selection of stuffed animals.

Majority of the stuffed animals that are sold are well known characters from all facets of the children’s

entertainment industry.

a. Brand name

A couple of our main competitors’ products include Disney characters and nickelodeon

characters.

b. FeaturesThe products that they offer are basic stuffed animals that resemble what children see when

their watching their favorite shows. The products are promoted as being n hypoallergenic materials.

c. PackageThe store brought is of the shelf with no packaging. The products that are ordered and shipped

come in standard mail packaging.

2. Competitor’s prices

Prices start from around $40 Brazilian Real. For products that start at $50 Real, payment plans

are offered in installments without interest, the highest priced items around $130 Real.

3. Competitor’s promotion and advertising methods

60

Disney and Nickelodeon products are promoted and advertised initially through Television

shows and movies that the characters appear on. They are also promoted through companies like the

Long Jump, magazines, and movies.

4. Competitor’s distribution channels

Currently, the Long Jump distributes its products in approximately 3,500 points of sale

throughout Brazil, being present in different distribution channels, such as Toy Stores, Magazines,

Hypermarkets, E-commerce’s, among others.

C. Market size

The market size for toys, stuffed animals is continuing to grow over the past five years. The Brazilian toy market is very large, selling approximately 600 million dollars in 2011.

1. Estimated industry sales for the planning year

The estimated revenue for Brazil in 2011 is 600 million. As the market continues to grow over

the next five years the industry sales will be at 750 million in 2016.

2. Estimated sales for your company for the planning year

The toy market for Brazil accounts for 24 percent of the market, we are hoping to penetrate 2

percent of our market, this will give Build a Bear 12 million in sales for the up coming year.

D. Government participation in the marketplace

61

Cannot find this information in the library, or anywhere on the Internet.

1. Agencies that can help you

Cannot find this information in the library, or anywhere on the Internet.

2. Regulations you must follow

Certification of toys intended for children below 14 years old is compulsory for both domestic

and foreign-manufactured products in Brazil. All products imported into Brazil are subject to Brazil’s

import procedures and fees, which are managed through the computerized system SISCOMEX (Trade

Foreign System). U.S. companies should be familiar with any Brazilian standards associated with their

products, as noncompliance could result in their goods being held from entry. Brazilian legislation

requires Portuguese translation of all technical manuals and restricts the import of used equipment,

parts and accessories.

V. Sources of information

Sources either listed following statistics or located in the Bibliography

IV. Preliminary Marketing Plan

62

Executive summary

After all the reviewing and planning and decision-making, Build-A-Bear in Brazil is really

starting to come together as a successful business venture. It will take a lot of money to build the 4

retail stores in Brazil’s 2 largest cities, but these stores will be very successful because they are placed

in the wealthier areas around other fine retail shops.

We plan to sell 1.2 million stuffed animals in our first year, resulting in $12 million in sales

revenues. By year 5, we expect to take revenues up to $12 million and see profits of $6 million. Yes

our plan is very aggressive and we have very high hopes for success, but our ambition is rationalized

by the fact that Brazil gets to host two of the world’s premier events, the World Cup and the Olympics,

within a span of 3 summers.

Our biggest dilemma was determining a reliable and efficient way to ship our product

from China to Brazil for as little cost as possible. We didn’t want to pay a lot for shipping because we

would have been required to reflect that in the retail prices of our product. We decided on ocean

freight because it was the cheapest, even with Brazil’s merchant marine tax. Our product will go

straight from the dock at the Port of Santos to our retail stores where it will be available for purchase.

Customers can pay by cash or credit, but we will not offer payment plans.

Our expenses may be high, but when the World Cup and the Olympics come around we will see very

large profit margins off of our special edition “national team” items, which have a very high markup

because they will become a collector’s item

I. The marketing plan

63

Our plan as build a bear is create a product in which will serve as both a child’s companion as

well and a heartfelt keepsake from international spectacles. Our new direction for an already existing

company is to create a specialty model in which will cater to the spectators and patrons of both the

2014 World Cup and the 2016 Olympics. Our target will be Brazilians and tourist who are in Brazil for

these worldwide competitions.

A. Marketing objectives

1. Target market(s) (specific description of the market)

A. Our primary market is the children of Brazil in the age group of 3-12 years.

In families that are middle and upper class mainly in the major cities of

Brazil i.e. Rio De Janeiro and Sao Paulo

B. Our secondary market would be the spectators of the 2014 World Cup and

the 2016 Olympics. These people will be interested in our product because it

will act as a keepsake, and remind them of their trip to either the World Cup

or the Olympics. These people had the disposable income in order to travel

to Brazil and purchase tickets to the events, so the 29,99 real for the basic

bear and 49,99 real for the collector’s edition is reasonable to remember a

priceless trip.

2. Sales forecast for 2012-2017

64

Year 2012 2013 2014

Toy and Animal Sales $600,000,000.00 $650,000,000.00 $700,000,000.00

Sales Annually $12,000,000.00 $13,000,000.00 $14,000,000.00

Year 2015 2016 2017


Sales Annually $15,000,000.00 $16,000,000.00 $17,000,000.00

3. Profit expectations 2012-2017

2012 $6,666,000

2013 $7,222,000

2014 $7,777,000

2015 $8,333,000

2016 $8,888,000

2017 $9,444,000

4. -Market penetration and coverage

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We are looking to penetrate 2 percent of our market because the consumers who are looking to

purchase stuffed animals or toys are willing to spend a decent amount The percentage we found that

the market in Brazil is looking to spend is 144,000,000 in sales for the 2012 year.

B. SWOT Analysis

1. Strengthsa. New concept for the country. Children will be able to build their toy

versus just pulling it off the shelf creating a sense of b. Select accessory’sc. Promotes a sense of pride for the country of brazil and also sports

spectatorsd. Souvenir for sporting events e. Attractive to both children and adultsf. Product is cheaper than competitors

2. Weaknessesa. Most of our sales will be seasonal b. Limited locationsc. Availability of shipping the productd. The product is not a well-known character like those of our

competitorse. Short product life cycle

3. Opportunitiesa. Promoting our product at the World Cup and the Olympics.b. The collector’s edition could potentially increase in value.c. Capitalize on a non existing market.

4. Threatsa. Our company / product is not well known compared the distribution

channels of our competitorsb. We are entering a non-developed niche market.c. Customers tend to be very loyal to brand name productd. New entrants into the markete. Poor protection against Intellectual Property Rights.f. Employees are not familiar with the culture.

C. Product adaptation or modification

66

1. Core component

The main reason that we have such great success in our market is that we really don’t have to

adapt to gain market share. Our product is universal and it allow us to market to the now crowd. We

are currently promoting for Brazil’s World Cup and Olympics, but in 3 years we will be moving on to

the next event to offer our customers a keepsake of the event that will last a life time.

2. Packaging component

Our build a bear product, is a bear that is customized with accessories to portray you favorite

player or athlete in the World Cup and or Olympics. You purchase a bear, and can than pick out a

jersey with player name and equipment. Our premium bear are sold with a protective stain resistant

case that allow for optimal viewing. Our traditional bear is sold with a inexpensive dust-protecting

bag.

3. Support services component

We strive for complete satisfaction, and aim to please each and every one of our customers.

We allow all purchases to be returned within 90 days of purchase. If your bear is ever in need of

repair there is a 800 number in which you can call and make arrangement to have the bear sent out and

repaired

D. Promotion mix

67

We will use all methods possible to educate our potential customers of the Build a Bear special World Cup and Olympic editions.

1. Advertising

We will use all aspects of advertising to promote our product to the sporting community. We

will out extreme emphasis on our slogan of Build a Bear, Build a Memory. We will advertise on

television, on the radio, in sporting magazines, and put a strong outdoor advertising campaign together

just prior to the start of the events, but not in Sao Paulo where billboards are against the law.

a. Objectives

We would focus on a trial and continuity for our advertising objectives. The purpose of the trial

objective is to encourage customers to make an initial purchase of a new product. Companies will

typically employ creative advertising strategies in order to cut through other competing

advertisements. The reason is simple: Without that first trial of a product by customers, there will not

be any re peat purchases. Continuity advertising is a strategy to keep current customers using a

particular product. Existing customers are targeted and are usually provided new and different

information about a product that is designed to build consumer loyalty.

b. Media mix

For our media mix to be incorporated in selling our product, we would consider television

advertisements, outdoor advertisements, and radio advertisements. These would allow us to almost

guarantee to reach almost all of the population.

c. Message

68

Our advertising plan is to focus on our slogan of, “Build a Bear, Build a Memory.” Out

product is an excellent gift for a father to get his young child that did not join him on the trip to the

World Cup and or Olympics. We want to emphasize the exclusiveness of our premium bear and

educate potential customers of the fact that it has the potential to increase drastically in price as there

will only be a limited number produced.

d. Costs

The costs for the television advertisements would be the most expensive but also provide the biggest

impact to the wealthy market. The radio and outdoor ads would be cheaper in cost but not as affective

since Brazil is a large country, so outdoor advertisements would require additional marketing research

as to primary locations to best reach the target population.

a. Objectives

We will not be introducing an entirely new product but a new product line. Therefore, we will be

looking to strengthen brand loyalty.

b. Coupons

We are going to offer coupons if the purchaser becomes a club card member. The consumer

will receive discounts for purchasing items with our store.

c. Premiums

No premiums apply to this.

69

d. Costs

6 U.S. dollars per stuffed animal.

3. Personal selling

Our retail location will have experienced sales personal on site, and available to help our

customers build their choice of animal(s).

4. Other promotional methods

We will offer sales on our items that are not selling more than 50 units per month, and on the animals that are being discontinued.

E. Distribution: From origin to destination

1. Port selection

Our closest port is in Santos, Brazil.

a. Origin port

Shanghai, China

b. Destination port

Our port is in Santos, Brazil.

2. Mode selection: Advantages/disadvantages of each mode

70

The wholesalers and middlemen are very popular in some markets, in the toy market wholesalers or middlemen are not very popular because the product gets shipped right from the factory.

a. Railroads

The railways have a total of 29,295 km, most of them are the normal standardized gauges. The railways cover most of the southeast coast, along with most of them being privately owned. The Railroads can be a cheaper route to get products into Brazil. But, this can also cause an issue with time.

b. Air carriers

The railways have a total of 29,295 km, most of them are the normal standardized gauges. The

railways cover most of the southeast coast, along with most of them being privately owned. Air

carriers can be costly, but also a very efficient was of getting products quicker.

c. Ocean carriers

The Waterways are available to be navigated very easily through the 50,000 km of

water. The waterway is going to provide a cheaper way of transportation in Brazil.

The largest port is located in Santos, the ocean carriers can load and drop off in this port

because they are a private port and open 24 hours a day. The disadvantage to moving products can be

how long it actually takes to receive them.

d. Motor carriers

71

The Waterways are available to be navigated very easily through the 50,000 km of water. The

waterway is going to provide a cheaper way of transportation in Brazil.


because they are a private port and open 24 hours a day. The Motor carriers can also be a cheaper way

to transport products.

3. Packing

The Waterways are available to be navigated very easily through the 50,000 km of

water. The waterway is going to provide a cheaper way of transportation in Brazil.


because they are a private port and open 24 hours a day.

a. Marking and labeling regulations

Packages need to have the consignee’s mark, including the port mark also. The reason for

identifying the packages is to make sure each packages goes to the correct shipping yard.

b. Containerization

The Containers are available to be shipped from the United States. They are 20 feet by 8 feet

and 8 ½ feet tall.

c. Costs

72

The cost for the 20 foot container is between 2000 to 3000 U.S. dollars, this can increase up too 3000

to 4000 depending on the size of the container

4. Documentation required

The documentation required for bringing the products into Brazil is the shipping documents

that are from the initial shipper, along with what products are being shipped.

a. Bill of Lading

Brazil has a electronic bill of landing, where most other countries do not have this much

technology at their ports. The electronic billing system works very well but it does have its downsides.

The shipper must include the printed bill of landing along with the product the shipper delivered.

b. Dock receipt

The dock is used to have accountability when the item(s) are transferred by the carriers to the

port, these receipts will be left with the exporter.

http://eddywireless.com/yahoo_site_admin/assets/docs/Common_Export_Documents.155101757.pdf

c. Air bill

The air bill cannot ever by changed or modified, the shipments have documentation that must

be the same when the shipment left the exporter.

d. Commercial invoice

73

The Brazilian importers and exporters must be currently registered with the Foreign Trade

Secretariat. The consignee must have been included and appear on the commercial invoice for it to be

legal.

e. Pro forma invoice

The importers must file their application in order to be permitted to be able to ship their

product(s). The product(s) must be with the supplier’s pro forma invoice so the products have the

correct information to be correctly shipped.

f. Shipper’s export declaration

The shipper’s export declaration must have a permit in order to shipped product(s) from

country to country. It is very important that the documents have the correct export clearance, so they

can reach their destination.

g. Statement of origin

Statements of origin are located on the shipping containers and packages and the company letterhead.

h. Special documentation

74

Special certificates will be needed when shipping with the United States and their special trade

agreements. There are various special documents will be required with certain shipping commodities.

If the shipments contain live plants and or animals that can possibly carry diseases, these will have to

go through an inspection process. (http :// www . buyusa . gov / newhampshire / brazildoclabel . html )

5. Insurance claims

If the packages are insured (which is recommended) the receiver must review the item(s) that

were received. Depending on what type of claim it is, the proof of damage, or proof of loss but be

stated and or shown.

6. Freight forwarder

Here are a few of the freight forwarders that are available to use in Brazil . There are more

available if these companies are unavailable . A & F Global Logistica e Transporte Internacional

Ltda , AGUIAR - Ag Tur Cargas Aguiar Ltda, Ams Log, (http://www.azfreight.com)

F. Channels of distribution (micro analysis)

1. Retailers

Within the next three to five years there will be more Build a Bear locations in Brazil. These

locations will help serving our customers. If we do not have the product they want in our inventory,

we will be able to get it from one of our other locations.

75

http://www.buyusa.gov/newhampshire/brazildoclabel.html

http://www.azfreight.com/

http://files/Low/Content.IE5/7L9FKCK1/writing_guide/prelim_I_D_6.html















































a. Type and number of retail stores

We are going to have stores with the availability to walk in and purchase what you are looking,

and the only global company that offers an interactive make-your-own stuffed animal retail-

entertainment experience. (http://www.buildabear.com)

b. Retail markups for products in each type of retail storeOur products will experience a three hundred percent markup rate.

c. Methods of operation for each type (cash/credit)

Cash payments are associated with low value purchases. The increasing use of other

instruments, cash payments still have good acceptance due to their exclusive features.

d. Scale of operation for each type (small/large)

Most of the operations have any where from 200 employees up to 3,000 employees.

2. Wholesale middlemen

The wholesalers and middlemen are very popular in some markets, in the toy market

wholesalers or middlemen are not very popular because the product gets shipped right from the

factory.

a. Type and number of wholesale middlemen

There are 370 wholesale and retail businesses, which sell various products to the retailers in

Brazil. There are distributors that sell products to the retailers.

b. Markup for class of products by each type

76


c. Methods of operation for each type (cash/credit)Cannot find this information in the wholesale book, or anywhere on the Internet.

d. Scale of operation (small/large)

Some of the wholesale operations in Brazil can have employ as many as 2 people all the way

up too 2,000 employees. Brazil has both large and small operations.

3. Import/export agents

150,793 Import/export agents in Brazil.

4. Warehousing

We found there are 18 warehousing in Brazil

G. Price determination

There are many different aspects we had look into when determining the cost of

transportation of our products and deciding how to price them based on those costs.

1. Cost of the shipment of goods

77

We have arranged a deal with our shipping company to reduce our costs of

shipping to around $4,000 per shipping container from the port of Shanghai to the port of Santos in

Brazil. This cost includes pier chargers as well as loading and unloading charges. Each 20ft long

container holds approximately 8,000 items.

2. Transportation costs

Once off the ship, the bears will be loaded onto trucks which will take them to

our retail stores. We have a contract with the trucking company that states that they will charge us

$0.19 per mile that the trucks travel.

3. Handling expenses

a. Pier charges

Pier charges are already included in our cost of shipping

b. Wharfage fees

[See above]

c. Loading and unloading charges

Loading and unloading charges are already included in the shipping charge.

4. Insurance costs

We have found a company in Brazil that will insure our shipments for a rate of

1.3% of the value of the goods being shipped.

78

5. Customs duties

“There is an Industrial Product Tax (IPI) (Federal sales tax) that ranges between 5 and 15

percent and a Merchandise Circulation Tax (ICMS – state sales tax) that is generally around 18

percent. There is also a 1 percent miscellaneous tax. In addition, there is a Social Security tax that

varies by product but is approximately 10 percent. Contact the TIC for full explanation of how taxes

are applied.” (http://www.export.gov/logistics/eg_main_018142.asp)

6. Import taxes and value-added tax

The Merchant Marine Tax is currently assessed at 25% of ocean freight charges.

7. Wholesale and retail markups and discounts

We are not using wholesalers, so our product will not have any markups. We

will offer seasonal discounts around Christmas and Children’s day.

8. Company’s gross margins

The cost for producing our bears is $8 per unit for both the standard and special edition bears.

We will make $10 on our standard bear and $27 on our special edition bears.

9. Retail price

79

Retail price is $18 US for the standard bears, and $35 US for the special edition

World Cup and Olympics bears.

H. Terms of sale

Our product is a point-of-sale purchase and it is paid for on-site by the customer.

We do not offer payment plans because one of our target markets is tourists, and tourists will

not stay within the country so we would not be able to enforce our collections.

1. EX works, FOB, FAS, C&F, CIF

These special circumstances do not apply for our product.

2. Advantages/disadvantages of each

Does not apply.

H. Methods of payment

We will pay our suppliers monthly by check.

1. Cash in advance

80

We will pay our materials supplier $100,000 at the beginning of each fiscal year

to ensure a good business relationship in the year ahead, and then we will pay the rest of our expense

to them monthly.

2. Open accounts

Does not apply to our product

3. Consignment sales


4. Sight, time, or date drafts


5. Letters of credit


II. Pro forma financial statements and budgets

A. Marketing budget

1. Selling expense

81

Our selling expenses include retail store overhead, shipping and transportation

costs, employee payroll, insurance

2. Advertising/promotion expense

Our advertising expenses will start at $3,000 per month in the initial phase. We

will gradually increase that over time as we see the success of our product increase and we gain

market share. Our advertising and promotion expenses will be at its highest points just before and

during the 2014 World Cup and the 2016 Olympics to promote our special edition bears.

3. Distribution expense

We do not have a distribution expense because we are not using distributors or wholesalers.

4. Product cost

Our production costs are calculated out to equal about $6 per unit. This factors

in machinery, materials, facility expense, and payroll.

5. Other costs

Our biggest cost concern is actually shipping, which we have previously

discussed in detail.

82

B. Pro forma annual profit and loss statement (first year and fifth year)

Our cost on each item (including shipping) is $10. We expect to see sales revenues of

$12 million in the first year. Our cost of goods sold for the first year is $1.2 million, and expenses are

at $7.56 million, so we would expect to see a profit of $3,240,000 by the end of 2012.

In year 5, we hope to have a large portion of the market with sales of around $17

million. We will also introduce the special edition bears which won’t actually cost us any more to

produce than the regular bears. If our costs can stay the same, we would expect to see a profit of $6

million.

III. Resource requirements

Just like any new company expanding into a new continent, Build-A-Bear will require a lot of

money and people to meet its business expectations. We have factored in many aspects of doing

business abroad and we have come up with totals that we believe will be sufficient to meeting our

needs so that we may be successful in this new market.

A. Finances

We have communicated with the executives at Build-A-Bear in the United States and determined

that each franchised store will cost $5 million. We plan to start with 4 retail stores, so we will need

$20 million just for the retail stores. If we spend $3,000 per month advertising, the total ad expense

for the first year will be $36,000. Shipping costs for the first year total up to $800,000. We will also

need an extra $500,000 cash on hand for emergencies. This brings our total financial requirement for

the first year to $21,336,000.

83

B. Personnel

Retail operations will require 10 employees. 2 managers and 8 associates. We will need

2 district managers, one in Rio de Janeiro and one in Sao Paulo, as each city has 2 stores. We will also

need to hire a new Brazilian logistics team to manage shipments and communicate back to the main

headquarters in the United States. This should be four people. In total, we require 46 people.

C. Production capacity

Build-A-Bear’s factory in China will need to expand in order to produce 1.2 million

more units per year. .

V. Sources of information

Either listed following information or located in the Bibliography

84

VI. Appendixes

Year 2012 2013 2014


Sales Annually $12,000,000.00 $13,000,000.00 $14,000,000.00

Year 2015 2016 2017


Sales Annually $15,000,000.00 $16,000,000.00 $17,000,000.00

85

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FinishedCountryProject[1]

Documents

rio de janeiro

merchant marine

shippers export

normal standardized

asian immigrant

guarani language

gain market

added tax